Steelcase CEO Discusses F3Q2011 Results – Earnings Call Transcript

Steelcase CEO Discusses F3Q2011 Results â¿¿ Earnings Call Transcript
By Seeking Alpha ,

Steelcase Inc. (SCS)

F3Q2011 Earnings Call Transcript

December 17, 2010 10:00 am ET

Executives

Raj Mehan – IR

Jim Hackett – President and CEO

Dave Sylvester – VP and CFO

Terry Lenhardt – VP, North America Finance

Mark Mossing – Corporate Controller and Chief Accounting Officer

Analysts

Budd Bugatch – Raymond James

Matt McCall – BB&T Capital Markets

Todd Schwartzman – Sidoti & Company

Mark Rupe – Longbow Research

Jeff Matthews – Ram Partners

Presentation

Operator

Compare to:
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» Steelcase CEO Discusses Q2 2011 Results - Earnings Call Transcript
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Good day, everyone, and welcome to Steelcase's third quarter fiscal 2011 conference call. As a reminder, today's call is being recorded. For opening remarks and introductions, I would like to turn the conference call over to Mr. Raj Mehan, Director of Investor Relations.

Raj Mehan

Thank you, Mary. Happy holiday season, everyone. Thank you for joining us for the recap of our third quarter fiscal year 2011 financial results. Here with me today are Jim Hackett, our President and Chief Executive Officer; Dave Sylvester, our Chief Financial Officer; Mark Mossing, Corporate Controller and Chief Accounting Officer; and Terry Lenhardt, Vice President, North America Finance.

Our third quarter earnings release, which crossed the wires yesterday, is accessible on our website. This conference call is being webcast, and presentation slides that accompany this webcast are also available on our website at ir.steelcase.com. And you can find a replay of this call posted to the site later today. In addition to our prepared remarks, we will respond to questions from investors and analysts.

Our discussion today will include references to non-GAAP financial measures. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Therefore, management believes this information is also useful for investors. Reconciliations to the most comparable GAAP measures are included in the earnings release and webcast slides.

At this time, we are incorporating by reference into this conference call and subsequent transcript the text of our Safe Harbor statement included in yesterday’s release. Certain statements made within the release and during this conference call constitute forward-looking statements. There are risks associated with the use of this information for investment decision-making purposes.

For more details on these risks, please refer to yesterday’s release and Form 8-K and the company's 10-K for the year-ended February 26, 2010, and our other filings with the Securities and Exchange Commission. This webcast is a copyrighted production of Steelcase Inc.

With those formalities out of the way, I'd turn the call over to our President and CEO, Jim Hackett.

Jim Hackett

Thank you, Raj. And good morning to all. Happy holidays as well. We’re never sure on these calls who might be following our discussions for the first time. So some of you veterans may have heard me say this before, but let me remind you what history in our industry tells us. In our recessions, our industry enters the downturn later and it exits later as well.

So we’ve been saying that if you saw other parts of the economy show improvement and wondered when that good news would reach into our sector, it now has. We are reporting for the second straight quarter performance that exceeded our own expectations. But some are wondering how we can see relatively low growth GDP in the western economies, it also had the growth rates in this quarter’s report be so high.

Dave Sylvester, our CFO, will contrast the differences in quarters in the previous year for you. And I want to make the point that most of the world’s corporations that make up our client base did exceptional work during the downturn to engineer cost out and to build large cash positions. This left them in great shape to now invest. And I think we’ve had global GDP growth somewhere near 4.5%. So even though this urge by large companies to invest is still tempered somewhat, I believe that more and more projects are getting green-lighted.

The principle behind these investments trends into the short-term and they believe to support that many see the turnaround in mid decade. So in other words, it’s okay to get started now in projects that would affect our industry. There are still some significant issues in the economy that could alter our momentum. Unlike everyone else, we’re watching the challenge in European countries that are working very hard to solve their debt and related economic issues.

I should point out to the particular nations most often in the headlines that have this challenge in the capital ratios in banks, they represent small piece of the overall international business, and we’re doing very well in the larger markets that are lot more stable. In fact, almost all of our markets and segments contributed to the 15% organic growth that you will hear about later in this discussion.

And as we said on our call at the end of Q2, our decision to invest in growth during the downturn is really paying off now. That’s particularly true as we look at our Asia-Pacific business, which has consistently shown much higher growth rates in the average of other countries in our business, just consistent. And we’ve had some especially significant wins in China during the quarter. Simple indicators tell us a great deal as well.

The roster of large corporate companies who visited our campus in Grand Rapids over the past quarter has been a very impressive list. I’ve been very enthused by the number of customers who want to address to legacy office spaces that need to change. All the trends in our society around mobility and technology have pointed this, but the recession dampened that transition. It seems like it’s not contained anymore.

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